Ch 16 The Labor Markets

The marginal revenue product establishes

An upper limit to the wage rate an employer is willing and able to pay.

A firm's demand for labor is referred to as a derived demand because

It is derived from the demand for the product that the labor is producing.

The law of diminishing returns states that, ceteris paribus, the

MPP of labor declines as more of it is employed with a given quantity of other (fixed) inputs.

The change in total revenue associated with one additional unit of input is referred to as

Marginal Revenue Product(MRP)

The elasticity of labor supply measures the

Responsiveness of labor supplied to changes in the wage rate.

When the minimum wage is raised in a competitive market, ceteris paribus,

Some workers are better off and some are worse off.

The marginal physical product of labor is equal to

The change in total output associated with one additional unit of labor.

Which of the following is not consistent with a minimum wage that is set above the equilibrium wage?

There will be no unemployment.

In Figure 30.2, the equilibrium wage rate is

$16 per hour.

In Figure 30.2, unemployed labor at the equilibrium wage is equal to

0 workers.

The number of people employed in the competitive market depicted in Figure 30.2 at a wage of $20.00 per hour is

160

As an individual earns additional income, the marginal utility of income tends to

Decrease

The labor supply curve starts to bend backwards once the

Income effect exceeds the substitution effect.

Students who major in computer science are paid a lot more when they graduate than those who major in philosophy because

Information technology is a growth industry.

A firm should hire an additional worker as long as the wage rate is

Less than or equal to the MRP.

In Figure 30.2, a minimum wage of $12 will result in

No shortage or surplus of workers.

In Figure 30.2, a minimum wage of $20 will result in a

Surplus of 32 workers.

A competitive firm should continue to hire workers until the MRP is equal to

The market wage rate.

For an upward-sloping labor supply curve, the quantity of labor supplied varies directly, ceteris paribus, with

the wage rate